Chinese Central Planning? Yes, There’s an ETF, Even for That

By Brendan Conway

How’s this for completing a circle: Wall Street’s latest fund owes as much to Mao Zedong as to the New York Stock Exchange.

The KraneShares CSI China Five Year Plan ETF (KFYP) aims to profit from China’s latest Five Year Plan, specifically by investing in companies deemed to be beneficiaries from Beijing’s policies. Launching on the NYSE’s Arca exchange tomorrow, the fund is the brainchild of startup ETF purveyor KraneShares, which is planning a family of China-themed funds.

Bloomberg

The industries in focus turn out to be pretty routine. The prospectus seems to list just about everything except the financial sector:

[T]he most recently released Five Year Plan, the Twelfth Five Year Plan (2011-2015), has proposed a focus on several areas including, but not limited to, increasing domestic consumption; modernizing agriculture through mechanization and improvement of agricultural service businesses; encouraging stable urbanization; promoting energy saving and environmental protection; and encouraging domestic technological innovation. … Underlying Index components include securities of companies in various sectors including, but not limited to healthcare, IT/Internet, autos, industrial, machinery, materials, agriculture thematic, low carbon thematic (including alternative energy), high-end equipment manufacturing, transportation, consumption and technology, media and telecommunications industries.

Later in the week, after we get a look at the ETF’s holdings, we’ll show you whether, and how, the focus veers appreciably from investor favorites iShares FTSE China 25 ETF (FXI), SPDR S&P China ETF (GXC), and iShares MSCI China Index Fund (MCHI).

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.